- EUR/USD: bears getting stuck in ahead of the ECB tomorrow, what will be the outcome?
- EUR/USD testing the lowest levels for some time, penetrating the rising 100-D SMA.
EUR/USD has fallen below the 100-D SMA in an extension below the rising support line from the start of Feb and early April business lows. Currently, EUR/USD is trading at 1.2173, down -0.48% on the day, having posted a daily high at 1.2239 and low at 1.2168.
There were no major European data releases this morning and instead the dollar is leading the way with US yields in the ten years above 3% and making a line in the sand there within a high range today so fare between 2.99%-3.03%.
ECB on the cards, what is in store?
However, the key focus for this week will be the ECB, (no change expected). The markets are positioning for a dovish outcome given the series of data misses of late and the divergence between the Fed and ECB is compelling, opening the downside in the range with eye sn the 28th Feb lows of 1.2154.
"It seems unreasonable to expect Draghi to shed much light on the interest rate outlook. What investors can count on is that the first rate hike will happen sometime after the asset purchases are finished. It is time dependent insofar as the ECB has outlined the sequence, but it is data dependent in terms of timing of the rate hike. We had pencilled it in for around the middle of 2019, before Draghi's term ends that October. Disappointing data in H1 19 could see that pushed back into Q3. It is difficult to see the hike in Q1 19, but stronger data, especially price pressures, could see it move into Q2, " analysts at Brown Brothers Harriman explained.
EUR/USD levels
Analysts at Scotiabank are neutral/bearish in their outlook while spot is holding yesterday’s range below 1.22 the figure: "Pressure on support in the mid 1.22 area this week leaves the broader picture looking a little less secure than we had anticipated but, given the extensive ranging work done by the market earlier in the year, a conclusive bearish break out remains absent, in our opinion (we see broader support down to 1.2045/1.2145 at the moment)."
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